Short answer. Yes. The Civil Code voids a contract that purports to deliver goods, securities, or shares of stock, but where the real intention is that only the difference between the stipulated price and the market price at the pretended delivery date will be paid by the loser to the winner. The loser may recover what he has paid.
What the law says
the transaction is null and void. The loser may recover what he has paid
Civil Code, Article 2018 — Futures/Difference Contracts Void. Read the full provision →
What the law says
If a contract which purports to be for the delivery of goods, securities or shares of stock is entered into with the intention that the difference between the price stipulated and the exchange or market price at the time of the pretended delivery shall be paid by the loser to the winner
Civil Code, Article 2018 — Futures/Difference Contracts Void. Read the full provision →
What makes this kind of deal void
The Civil Code targets a specific arrangement: a contract that on its face purports to be for the actual delivery of goods, securities, or shares of stock, but that the parties intend to settle only by paying the difference between the price stipulated and the exchange or market price at the time delivery was supposed to happen. Actual delivery is never meant to occur; the deal is really a bet on which way the price moves. Because the real intention is a pure price-difference wager dressed up as a delivery contract, the law declares the transaction null and void, regardless of how the parties labeled or documented it.
Why cash-settlement structure matters
If your futures deal was structured so that the loser simply pays the winner the difference between the agreed price and the market price at the pretended delivery date, with no genuine intention on either side that goods, securities, or shares would actually change hands, that structure is exactly what the provision describes. Whether the contract calls itself a futures contract, a forward, or something else does not control; what matters is whether the parties' real intention was a price-difference settlement rather than true delivery. That intention is what triggers the nullity, not the label on the paperwork.
Recovering what you paid
Because the transaction is void, the law gives the losing party a specific remedy: the loser may recover what he has paid. This lets a party who paid out on a losing position get that payment back precisely because the underlying contract never had legal effect to begin with. Recovery here rests on showing that the arrangement fits the pattern the provision describes, meaning delivery was never truly intended and the payment was, in substance, settling a price-difference wager rather than a genuine sale of goods, securities, or shares of stock.
Cases citing this provision
These Supreme Court decisions cite the provision above. We list them so you can read them yourself; the summaries of what each decided are not ours to give.
- Safic Alcan & Cie vs. Imperial Vegetable Oil Co., Inc, G.R. No. 126751, March 28, 2001 — read the decision on LawPhil →
- NM Rothschild and Sons (Australia) Limited vs. Lepanto Consolidated Mining Company, G.R. No. 175799, November 28, 2011 — read the decision on LawPhil →